Macron pushes EU labour rule changes on central Europe tour

Issued on: 23/08/2017 - 17:38Modified: 24/08/2017 - 08:16

Bertrand Guay/Pool/AFP | Austrian chancellor Christian Kern (R) stands next to French President Emmanuel Macron (C) and his wife Brigitte Macron upon arrival on August 23, 2017 at the airport in Salzburg.

French President Emmanuel Macron begins a three-day tour of central Europe on Wednesday with controversial EU labour rules at the top of his agenda.

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French President Emmanuel Macron said on Wednesday there had been progress with the leaders of Austria, Czech Republic and Slovakia on finding a solution to the issue of posted workers in the European Union.

"Our talks mark a real step forward, real progress towards a compromise in October and I'm glad about that," Macron told reporters after a leaders' summit in the Austrian city of Salzburg.

“The single European market and the free movement of workers is not meant to create a race to the bottom in terms of social regulations,” Macron told reporters alongside Austrian Chancellor Christian Kern after kicking off his trip in Salzburg on Wednesday. “It is exactly this that is fuelling populism and eroding confidence in the European project,” he said.

French President Emmanuel Macron on detatched workers

The directive sets out rules for workers temporarily “detached” from one EU member state to another. It allows companies to dispatch employees across EU borders to work while continuing to pay social charges in the home country.

The posted workers, meanwhile, are entitled to a set of core labour rights in the receiving country, including the respect of maximum work periods, minimum rest periods and paid holidays, and local health, safety and hygiene standards. But controversially, the law requires that employers respect only the minimum pay rate in the receiving country; a boon for a posted worker from a country with a lower minimum wage -- The minimum wage in France, for example, is more than three times Poland’s 450-euro monthly minimum -- but potentially still less than the pay guaranteed by collective agreements to local workers in the receiving country.

The directive dates back to 1996, well before a number of central and eastern European former communist countries joined the EU beginning in 2004.

With wide gaps between current member states’ wage and social security costs, critics say the directive is vulnerable to fraud and that it promotes “social dumping,” eroding wages for locals in wealthier countries while giving Eastern European companies an unfair competitive advantage over local firms in Western Europe.

Some central and eastern European members, such as Poland, Hungary, Slovakia, and the Czech Republic – known collectively as the Visegrad Four – argue, meanwhile, that they should be allowed the competitive advantage of lower labour costs in order to make up ground after decades of economic stagnation under Communism. Austria’s ruling Social Democrats, on the other hand, have said that an influx of workers to that country from the east is putting downward pressure on Austrian wages.

Although posted workers represent less than one percent of the EU workforce, the directive is also a standard Euroskeptic bugbear – Le Pen, for one, had campaigned to scrap it altogether -- and has exacerbated tensions between EU members east and west.

Macron, for his part, campaigned to keep the directive, saying it was useful to France but that it needed to be more fair. France is Europe’s second-largest receiver of posted workers (286,000 in 2015) after Germany, but it also the third-largest sender (140,000) after Poland and Germany, according to 2015 figures. Poland is the biggest sender of workers to France with 46,800, while French workers tend to be dispatched to Belgium, Germany, Spain, Britain or Italy.

The French president has said a European Commission proposal for reform does not go far enough. Paris, for example, wants the duration permitted for posted work to be limited to 12 months – half the current allowance -- and to further bolster sanctions on abuses of the system.

Estonia, which currently holds the EU’s rotating presidency, is slated to put forward a new reform proposal in September, in view of a deal that could come as soon as the end of October.

Macron has meetings scheduled with the Romanian President and Prime Minister, Klaus Werner Iohannis and Mihai Tudose, on Thursday. Immediately afterwards, he will fly to Varna, Bulgaria, for talks with the Bulgarian President and Prime Minister, Roumen Radev and Boïko Borissov.